Tuesday, March 5, 2013

Short Answers to Unanswered Questions: Insurance Concerns and BDO vs BPI Part "N"


Dear Investor Juan,

I’m 24 years old and is earning a decent income. About last month, I came across your blog and I’m glad I did. I just finished reading your all of your posts. Ever since I started reading your blog, I got into serious thinking about my future and finances. I just started opening investments in BDO and even enrolled in EIP. I’m aiming towards financial stability and having counter measures against the unpredictability that future brings. I’m still learning how to effectively manage my finances and make my money grow.

You caught my interest on your last post about insurances. Now I’m thinking of signing up for one. But I don’t really know much about it. First thing, which insurance company should I signup for? What plan should I go for? I’ve read few of Sun Life Financial’s products information but can’t decide. I’m actually quite confused about this one and I’m hoping you could provide your view about this to help me get a sound decision.

I hope you’d be able to shed some light to this. Thank you for taking the time to read my mail.


Dear jbsalts,

Thanks for your support, it means a lot to me.

To answer your questions, first get details about your employer-provided insurance coverage, which I'm sure you already have, from your HR department.

Get more life insurance only if you have dependents and/or you are the breadwinner of the family, and you think your company coverage is not enough.

For health insurance, you can ask your HR department if you can upgrade your company-provided coverage to include your family members if they don't have health insurance yet.

Regarding Sun Life's Financial products and other variable-life instruments, you might want to check out some of my past posts about the topic. In a nutshell, I advice against such insurance and investment hybrids because getting insurance and investing in UITFs separately is usually cheaper.

I hope I was able to help. Good luck!


Dear Investor Juan, 

I'm a newbie investor, I've just opened an equity and bond fund in BPI last January and that's before seeing the track record of BDO vs BPI. I'm really tempted to transfer to BDO cause it looks like BDO fund managers are a lot better. The thing that turns me off a bit is the convenience factor. In BPI I can monitor my investment online, and can subscribe and redeem online as well. If I choose too I can also do that regular subscription plan. I was searching the BDO website (I don't have a BDO account) trying to look for any mention of an online facility for investment but I could not find any, so it looks like I can't monitor online and I would need to go to the branch. I guess I'm just being 'tamad' since as you mentioned I can just do go to bloomberg website and see the latest price and do some math everyday to see If what I'm earning (loss)... I guess I just wanted to get your opinion on the convenience factor of having an online facility for BPI, vs no online.


Dear Anonymous,

I share the sentiment that one important (maybe the only?) benefit of going with BPI is convenience. However, how much that advantage is worth is purely subjective. Like you said, you're tamad, so maybe the convenience is worth more to you than a person who is not so tamad.

To help you decide, maybe see how much better a comparable BDO fund has performed against your BPI UITF in percent terms ever since you started investing, then multiply that by your initial investment to get a peso amount. Then ask yourself: is the extra convenience provided by BPI worth this much? If yes, stick with BPI; if not, move to BDO. It's like if you need to buy a sachet of shampoo and there's a store beside your house that sells it for 6 pesos and another store 5-minutes on foot away sells it for 4 pesos. Is the extra 10 minutes of effort worth the 2 pesos that you save? Only you can answer that.

(Follow up)

Hi Investor Juan, me again. I did some number crunching using the BDO and BPI investment calculator, and If I've done it right (and the calculators are correct)then below are my result comparing with my 50K investment in BPI and BDO. Summary: Dates Covered (Jan-Feb 2013 & 2012-2009) BDO Bond Fund Ave. Yield: 5.496% BPI Bond Fund Ave. Yield: 4.754% Difference: 0.74% Summary: Dates Covered (Jan-Feb 2013 & 2012-2009) BDO Equity Fund Ave. Yield: 30.402% BPI Equity Fund Ave. Yield: 19.652% Difference: 10.749% My Assessment for myself: For the Bond fund: I'll stay with BPI (for now) The 0.74% advantage of BDO on the Bond Fund does not fully out weight the convenience factor of being able check/subscribe/redeem my bond fund in BPI's mobile app anytime I would like to. On the Equity on the other hand... the 10.749% advantage of BDO over BPI for the same amount of time covered (2009-2012 and Jan-Feb 2013) is VERY significant!!! I shall be opening a BDO account this month! :D

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